For many Americans, their most valuable asset at the time of their death is the home in which they live. Of course, when you pass away, you will no longer need a home to live in, thus deciding what should happen to your home is one of the most important decisions you will want to think about when you work on your estate planning matters.
Here are five questions to think about with the assistance of an estate planning professional in determining the best options for gifting your home.
Do You Want to Gift Your Home At All?
There was a time when family homes were regularly passed on from generation to generation, but that is increasingly less the norm as successive generations become more geographically scattered and tastes in home size, style, and location change.
When a beneficiary in a younger generation receives a home he or she does not want to live in, that can be a lot more of a financial and logistical headache than they bargained for. And that beneficiary may not be in the best position to sell that home for the highest price, for any number of reasons.
Thus, it is important to decide not only who should receive the home but whether you want to gift it at all. You may decide to sell it before you pass or to leave instructions for a executor regarding the sale of the home after you die.
How Should Mortgage Payments Be Paid?
If you still owe mortgage payments on your home at the time of your death, then in most cases the mortgage will remain on the house even after it changes hands to a beneficiary. Although the beneficiary might not be personally be liable for those payments, the lenders may nevertheless foreclose on the home if payments are not made.
That may be a fine outcome, but make sure to take time in deciding whether you would rather have the remainder of the mortgage paid off with other estate assets before it is passed on.
What About Liens, Taxes, and Other Liabilities on the Home?
Similarly, any taxes that are owed on the home or any liens that are placed on the property by creditors will likely still be attached to the home after it passes on to a beneficiary. This may not necessarily lead to foreclosure but it can lead to other financial complications for your loved ones. As with mortgages, decide whether these obligations should be paid with other estate assets or not.
How Will Co-owner Beneficiaries Deal With the Shared Home Asset?
Many parents want to leave the family home to their adult children. Which is all well and good, but the fact is that many adult children struggle with co-ownership of a home. It is not unusual for expensive lawsuits to result when one adult child wants to live in the home and the other child (or children) wants to sell the house and split the proceeds.
This is as much a personal issue to be worked as a legal one, but it is definitely worth speaking about with your estate planning professional to determine the best option to avoid strife while preserving wealth.
Is a Trust a Better Option Than a Will?
Finally, many people find that transferring their home to a trust prior to their death is a far superior option than putting the home in a will. Doing so can avoid a long, expensive ordeal in probate court and can even help you avoid taxes. Speak to your estate planning professional for more details regarding placing your home in a trust.
Update Your Estate Planning With a Pasadena Estate Planning Attorney
Estate planning and probate attorney Christopher B. Johnson, located in Pasadena, California, has years of experience in all aspects of estate planning, and works with clients from all walks of life to create estate planning tools that reflect their needs and those of their beneficiaries. To request an immediate consultation, contact him today at (877) 755-9178.